European Stocks Drop Most Since August as Orange Falls

European stocks fell the most in more
than three months as investors weighed valuations before U.S.
jobs data this week that may help gauge when the Federal Reserve
will pare its stimulus.

ThyssenKrupp AG slid to a 10-week low after raising 882.3
million euros ($1.2 billion) through a share sale. Antofagasta
Plc led a measure of mining companies lower. Orange SA slipped
3.4 percent amid concern a price war in the French mobile market
will extend to fourth-generation data services. Sonova Holding
AG (SOON) declined 1.8 percent as Morgan Stanley cut its rating on the
Swiss hearing-aid maker.

The Stoxx Europe 600 Index fell 1.5 percent to 319.13 at
the close of trading, its biggest loss since Aug. 27. The gauge
has rallied 14 percent this year, even as analysts cut their
earnings estimate for its constituents to 21.37 euros per share
from 24.13 euros at the beginning of 2013. That pushed its
valuation to 14.9 times projected earnings, below the 15.72 mark
reached in October 2009, which was its highest level since at
least March 2005, data compiled by Bloomberg showed.

“There’s been a frenzy for European equities in the last
three months and we’re now waiting for a short-term
consolidation,” said Francois Savary, who oversees about $9.4
billion as chief investment officer at Reyl & Cie. in Geneva.
“A lot still depends on a few uncertainties in the U.S., such
as fiscal and monetary policy, that have the potential to
disappoint investors. Market psychology has been too optimistic
for Europe and expectations for 2014 growth may be too high.”

American Jobs

On Friday, investors will get the latest reading on U.S.
non-farm payrolls for November, and data may show the
unemployment rate fell to 7.2 percent, matching the lowest level
in five years. A jobs report tomorrow may show U.S. companies
added the most workers since June. The central bank will release
its Beige Book on economic conditions tomorrow.

The Fed has said it will monitor labor-market gains before
deciding when to pare its $85 billion of monthly bond purchases.
Policy makers will probably wait until their March 18-19
meeting, when they will reduce monthly bond purchases to $70
billion, according to the median estimate in Bloomberg’s survey
on Nov. 8. They next meet on Dec. 17-18.

The European Central Bank and the Bank of England will both
announce policy decisions on Thursday.

The Portuguese government raised 578 million euros by
selling 70 percent of its postal service CTT-Correios de
Portugal SA at 5.52 euros apiece, the top of the price range it
indicated. This was the first initial public offering in the
euro area’s third-most indebted country since June 2008.

National Markets

National benchmark indexes fell in all 18 western European
markets. The U.K.’s FTSE 100 lost 1 percent, while Germany’s DAX
slid 1.9 percent.

France’s CAC 40 (CAC) dropped 2.7 percent, for its biggest drop
since June. Credit Suisse Group AG cut its rating on French
stocks to underweight from benchmark, meaning investors should
holds less of the index than represented in reference gauges.

ThyssenKrupp fell 2.2 percent to 17.26 euros. The German
steelmaker sold 51.4 million new shares at 17.15 euros apiece.
The company yesterday plunged the most since August 2011 after
saying it would boost capital by 10 percent of its market value.

Price War

Orange declined 3.4 percent to 9.20 euros. Iliad SA’s Free
Mobile subsidiary said it will offer customers 4G Internet as
part of its monthly plans at no extra cost, according to a
statement. Bouygues SA retreated 4 percent to 26.61 euros.

Sonova lost 1.8 percent to 123.10 Swiss francs. Morgan
Stanley downgraded the stock to equal weight, similar to a
neutral recommendation, from overweight. New product releases
from competitors such as GN Store Nord A/S and William Demant
Holding A/S may hurt revenue growth, Morgan Stanley said.

Sanofi fell 3.1 percent to 74.81 euros, for its biggest
decrease in four months. Tests showed Sanofi’s U300 treatment
wasn’t more effective than the company’s best-selling Lantus
diabetes drug in a test of patients not already taking insulin,
Sanofi said.

The number of shares changing hands today in Stoxx 600-listed stocks was 17 percent greater than the average of the
past 30-days, data compiled by Bloomberg showed.